Jack in the Box Inc. Reports First Quarter 2024 Earnings
- Positive same-store sales growth for both Jack in the Box and Del Taco brands
- Strong restaurant level margins for Jack in the Box
- Expansion plans with new franchise development agreements in Florida and Michigan
- Improved franchise-level margins for Del Taco
- Total revenues decreased by 7.5% due to Del Taco refranchising efforts
- Net earnings decreased compared to the previous year
Insights
Jack in the Box Inc.'s report of a 0.8% increase in same-store sales and a 1.8% increase in systemwide sales growth reflects a modest performance in a competitive fast-food industry. While the growth is positive, the figures are relatively low, indicating a potential saturation in the market or a need for innovation to drive more significant growth. The reported 3.3% increase in restaurant-level margin is a strong indicator of improved operational efficiency, likely due to commodity deflation and sales leverage. However, the decrease in franchise-level margin due to the end of a beneficial royalty buyout in the previous year suggests that such improvements may not be sustainable without additional strategic measures.
The expansion agreements in Florida and Michigan represent a strategic move to capture new markets and are a positive sign of growth potential. However, the actual impact of these agreements will depend on the company's ability to effectively penetrate these new markets and the competitive landscape in those regions. The success of the New Smashed Jack burger, which sold out in less than three weeks, indicates a strong product-market fit and suggests that limited-time offers and product innovation could be a viable strategy for driving short-term sales.
The diluted EPS of $1.93 and operating EPS of $1.95 are important metrics for investors as they reflect the company's profitability. While these figures are robust, it's crucial to note that they are down from the prior year, which may raise concerns about the company's growth trajectory and profitability in the long term. The 7.5% decrease in total revenues is significant and is primarily attributed to the refranchising efforts of Del Taco. This strategy may improve operational efficiency but could also indicate a shift away from company-operated stores, affecting future revenue streams.
Jack in the Box's share repurchase of 0.3 million shares for $25.2 million and the declaration of a $0.44 per share dividend signal confidence in the company's financial health and a commitment to returning value to shareholders. However, the effectiveness of these capital allocation strategies should be continuously evaluated against the company's need to invest in growth and innovation.
From an economic perspective, the performance of Jack in the Box and Del Taco can be seen as reflective of broader economic trends, such as commodity deflation and wage and utility inflation. Commodity deflation has likely contributed to the improved restaurant-level margins, but wage and utility inflation may pose challenges for maintaining these margins over time. The company's ability to manage these economic pressures through pricing strategies and operational efficiencies will be critical for its financial health.
The adjustment of Del Taco's reporting calendar and the temporary closure of a restaurant for rebuilding are one-time events that have impacted systemwide sales figures. Investors should consider these factors when evaluating the company's performance and not solely rely on year-over-year comparisons. The economic implications of the company's expansion plans and new product launches will also need to be monitored to assess their contribution to sales growth and market share.
Jack in the Box same-store sales of +
Jack in the Box systemwide sales growth of +
Diluted EPS of
Jack in the Box restaurant level margin of
Jack in the Box signed development agreements with new franchisees to expand in
New Smashed Jack burger sold out in less than 3 weeks during Q1 soft launch
“The first quarter included notable progress on our long-term strategy and objectives we laid out at our recent Investor Day,” said Darin Harris, Jack in the Box Chief Executive Officer. “We were also pleased with the sales rebound for Del Taco, the outperformance of Jack in the Box restaurant level margin, and the completion of development agreements with new franchisees to open new markets. These results are a reflection of our compelling brands, as well as our initiatives to maximize four-wall economics and franchise profitability, which will continue to fuel our growth plan.”
Jack in the Box Performance
Same-store sales increased
Restaurant-Level Margin(1), a non-GAAP measure, was
Franchise-Level Margin(1), a non-GAAP measure, was
Jack in the Box grew net restaurant count by six in the first quarter, with seven restaurant openings and one restaurant closure. As of the first quarter, and since the launch of the development program in mid-2021, the company currently has 91 signed agreements for a total of 399 restaurants. Under these agreements, 41 restaurants have opened, leaving 358 remaining for future development.
Jack in the Box Same-Store Sales: |
16 Weeks Ended |
|||||
|
January 21, 2024 |
|
January 22, 2023 |
|||
Company |
2.0 |
% |
|
12.6 |
% |
|
Franchise |
0.7 |
% |
|
7.4 |
% |
|
System |
0.8 |
% |
|
7.8 |
% |
|
Jack in the Box Restaurant Counts:
|
2024 |
|
2023 |
|||||||||||||||
|
Company |
|
Franchise |
|
Total |
|
Company |
|
Franchise |
Total |
||||||||
Restaurant count at beginning of Q1 |
142 |
|
|
2,044 |
|
|
2,186 |
|
|
146 |
|
|
2,035 |
|
2,181 |
|
||
New |
2 |
|
|
5 |
|
|
7 |
|
|
— |
|
|
6 |
|
6 |
|
||
Refranchised |
— |
|
|
— |
|
|
— |
|
|
(5 |
) |
|
5 |
|
0 |
|
||
Closed |
— |
|
|
(1 |
) |
|
(1 |
) |
|
(1 |
) |
|
— |
|
(1 |
) |
||
Restaurant count at end of Q1 |
144 |
|
|
2,048 |
|
|
2,192 |
|
|
140 |
|
|
2,046 |
|
2,186 |
|
||
Q1 Net Restaurant Increase/(Decrease) |
2 |
|
|
4 |
|
|
6 |
|
|
|
|
|
|
|
||||
YTD Net Restaurant % Increase/(Decrease) [Q1'24 vs. Q4'23] |
1.4 |
% |
|
0.2 |
% |
|
0.3 |
% |
|
|
|
|
|
|
||||
Del Taco Performance
Same-store sales increased
Restaurant-Level Margin(1), a non-GAAP measure, was
Franchise-Level Margin(1), a non-GAAP measure, was
Del Taco had no change in total restaurant count in the first quarter, with three restaurant openings and three restaurant closings. Restaurant count at the end of the first quarter also reflects the Company's acquisition of 9 franchise restaurants primarily in the
Del Taco Same-Store Sales: |
16 Weeks Ended |
|||||
|
January 21, 2024 |
|
January 22, 2023 |
|||
Company |
1.8 |
% |
|
3.1 |
% |
|
Franchise |
2.4 |
% |
|
2.8 |
% |
|
System |
2.2 |
% |
|
3.0 |
% |
|
Del Taco Restaurant Counts:
|
2024 |
|
2023 |
||||||||||||||
|
Company |
|
Franchise |
|
Total |
|
Company |
|
Franchise |
|
Total |
||||||
Restaurant count at beginning of Q1 |
171 |
|
|
421 |
|
|
592 |
|
|
290 |
|
|
301 |
|
591 |
|
|
New |
— |
|
|
3 |
|
|
3 |
|
|
— |
|
|
2 |
|
2 |
|
|
Acquired from franchisees |
9 |
|
|
(9 |
) |
|
0 |
|
|
— |
|
|
— |
|
— |
|
|
Refranchised |
— |
|
|
— |
|
|
— |
|
|
(16 |
) |
|
16 |
|
0 |
|
|
Closed |
(1 |
) |
|
(2 |
) |
|
(3 |
) |
|
(1 |
) |
|
— |
|
(1 |
) |
|
Restaurant count at end of Q1 |
179 |
|
|
413 |
|
|
592 |
|
|
273 |
|
|
319 |
|
592 |
|
|
Q1 Net Restaurant Increase/(Decrease) |
8 |
|
|
(8 |
) |
|
0 |
|
|
|
|
|
|
|
|||
YTD Net Restaurant % Increase/(Decrease) [Q1'24 vs. Q4'23] |
4.7 |
% |
|
(1.9 |
)% |
|
— |
% |
|
|
|
|
|
|
|||
Company-Wide Performance
First quarter diluted earnings per share was
Total revenues decreased
Company-wide SG&A expense for the first quarter was
The income tax provisions reflect a year-to-date effective tax rate of
(1) Restaurant-Level Margin and Franchise-Level Margin are non-GAAP measures. These non-GAAP measures are reconciled to earnings from operations, the most comparable GAAP measure, in the attachment to this release. See “Reconciliation of Non-GAAP Measurements to GAAP Results.”
(2) Operating Earnings Per Share represents the diluted earnings per share on a GAAP basis, excluding certain adjustments. See “Reconciliation of Non-GAAP Measurements to GAAP Results.” Operating earnings per share may not add due to rounding.
(3) Adjusted EBITDA represents net earnings on a GAAP basis excluding certain adjustments. See “Reconciliation of Non-GAAP Measurements to GAAP Results.”
Capital Allocation
The Company repurchased 0.3 million shares of our common stock for an aggregate cost of
On February 16, 2024, the Board of Directors declared a cash dividend of
Guidance & Outlook Updates
All guidance and outlook provided on November 21, 2023, for the fiscal year ending September 29, 2024, remain the same as previously disclosed.
Conference Call
The Company will host a conference call for analysts and investors on Wednesday, February 21, 2024, beginning at 2:00 p.m. PT (5:00 p.m. ET). The call will be webcast live via the Investors section of the Jack in the Box company website at http://investors.jackinthebox.com. A replay of the call will be available through the Jack in the Box Inc. corporate website for 21 days. The call can be accessed via phone by dialing (888) 330-2508 and using ID 4115265.
About Jack in the Box Inc.
Jack in the Box Inc. (NASDAQ: JACK), founded and headquartered in
Category: Earnings
Safe Harbor Statement
This press release contains forward-looking statements within the meaning of the federal securities laws. Forward-looking statements may be identified by words such as “anticipate,” “believe,” “estimate,” “expect,” “forecast,” “goals,” “guidance,” “intend,” “plan,” “project,” “may,” “will,” “would” and similar expressions. These statements are based on management’s current expectations, estimates, forecasts and projections about our business and the industry in which we operate. These estimates and assumptions involve known and unknown risks, uncertainties, and other factors that are in some cases beyond our control. Factors that may cause our actual results to differ materially from any forward-looking statements include, but are not limited to: the success of new products, marketing initiatives and restaurant remodels and drive-thru enhancements; the impact of competition, unemployment, trends in consumer spending patterns and commodity costs; the company’s ability to achieve and manage its planned growth, which is affected by the availability of a sufficient number of suitable new restaurant sites, the performance of new restaurants, risks relating to expansion into new markets and successful franchise development; the ability to attract, train and retain top-performing personnel, litigation risks; risks associated with disagreements with franchisees; supply chain disruption; food-safety incidents or negative publicity impacting the reputation of the company's brand; increased regulatory and legal complexities, risks associated with the amount and terms of the securitized debt issued by certain of our wholly owned subsidiaries; and stock market volatility. These and other factors are discussed in the company’s annual report on Form 10-K and its periodic reports on Form 10-Q filed with the Securities and Exchange Commission, which are available online at http://investors.jackinthebox.com or in hard copy upon request. The company undertakes no obligation to update or revise any forward-looking statement, whether as the result of new information or otherwise.
JACK IN THE BOX INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF EARNINGS (In thousands, except per share data) (Unaudited) |
|||||||
|
16 Weeks Ended |
||||||
|
January 21, 2024 |
|
January 22, 2023 |
||||
Revenues: |
|
|
|
||||
Company restaurant sales |
$ |
224,040 |
|
$ |
270,191 |
|
|
Franchise rental revenues |
|
113,196 |
|
|
108,830 |
|
|
Franchise royalties and other |
|
73,330 |
|
|
76,390 |
|
|
Franchise contributions for advertising and other services |
|
76,932 |
|
|
71,685 |
|
|
|
|
487,498 |
|
|
527,096 |
|
|
Operating costs and expenses, net: |
|
|
|
||||
Food and packaging |
|
64,132 |
|
|
81,933 |
|
|
Payroll and employee benefits |
|
73,054 |
|
|
88,641 |
|
|
Occupancy and other |
|
42,053 |
|
|
51,371 |
|
|
Franchise occupancy expenses |
|
72,624 |
|
|
67,224 |
|
|
Franchise support and other costs |
|
5,194 |
|
|
1,877 |
|
|
Franchise advertising and other services expenses |
|
80,234 |
|
|
74,570 |
|
|
Selling, general and administrative expenses |
|
46,365 |
|
|
50,142 |
|
|
Depreciation and amortization |
|
18,473 |
|
|
19,402 |
|
|
Pre-opening costs |
|
465 |
|
|
331 |
|
|
Other operating expenses (income), net |
|
5,170 |
|
|
(5,501 |
) |
|
Losses (gains) on the sale of company-operated restaurants |
|
254 |
|
|
(3,825 |
) |
|
|
|
408,018 |
|
|
426,165 |
|
|
Earnings from operations |
|
79,480 |
|
|
100,931 |
|
|
Other pension and post-retirement expenses, net |
|
2,106 |
|
|
2,144 |
|
|
Interest expense, net |
|
24,486 |
|
|
26,148 |
|
|
Earnings before income taxes |
|
52,888 |
|
|
72,639 |
|
|
Income taxes |
|
14,205 |
|
|
19,385 |
|
|
Net earnings |
$ |
38,683 |
|
$ |
53,254 |
|
|
|
|
|
|
||||
Net earnings per share: |
|
|
|
||||
Basic |
$ |
1.94 |
|
$ |
2.55 |
|
|
Diluted |
$ |
1.93 |
|
$ |
2.54 |
|
|
|
|
|
|
||||
Weighted-average shares outstanding: |
|
|
|
||||
Basic |
|
19,893 |
|
|
20,921 |
|
|
Diluted |
|
20,051 |
|
|
21,000 |
|
|
|
|
|
|
||||
Dividends declared per common share |
$ |
0.44 |
|
$ |
0.44 |
|
|
JACK IN THE BOX INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED BALANCE SHEETS (In thousands, except share and per share data) (Unaudited) |
||||||||
|
January 21, 2024 |
|
October 1, 2023 |
|||||
ASSETS |
|
|
|
|||||
Current assets: |
|
|
|
|||||
Cash |
$ |
53,975 |
|
|
$ |
157,653 |
|
|
Restricted cash |
|
28,559 |
|
|
|
28,254 |
|
|
Accounts and other receivables, net |
|
63,251 |
|
|
|
99,678 |
|
|
Inventories |
|
4,381 |
|
|
|
3,896 |
|
|
Prepaid expenses |
|
8,982 |
|
|
|
16,911 |
|
|
Current assets held for sale |
|
23,656 |
|
|
|
13,925 |
|
|
Other current assets |
|
6,109 |
|
|
|
5,667 |
|
|
Total current assets |
|
188,913 |
|
|
|
325,984 |
|
|
Property and equipment: |
|
|
|
|||||
Property and equipment, at cost |
|
1,261,323 |
|
|
|
1,258,589 |
|
|
Less accumulated depreciation and amortization |
|
(845,375 |
) |
|
|
(846,559 |
) |
|
Property and equipment, net |
|
415,948 |
|
|
|
412,030 |
|
|
Other assets: |
|
|
|
|||||
Operating lease right-of-use assets |
|
1,411,019 |
|
|
|
1,397,555 |
|
|
Intangible assets, net |
|
11,251 |
|
|
|
11,330 |
|
|
Trademarks |
|
283,500 |
|
|
|
283,500 |
|
|
Goodwill |
|
329,583 |
|
|
|
329,986 |
|
|
Other assets, net |
|
247,048 |
|
|
|
240,707 |
|
|
Total other assets |
|
2,282,401 |
|
|
|
2,263,078 |
|
|
|
$ |
2,887,262 |
|
|
$ |
3,001,092 |
|
|
LIABILITIES AND STOCKHOLDERS’ DEFICIT |
|
|
|
|||||
Current liabilities: |
|
|
|
|||||
Current maturities of long-term debt |
$ |
29,941 |
|
|
$ |
29,964 |
|
|
Current operating lease liabilities |
|
159,045 |
|
|
|
142,518 |
|
|
Accounts payable |
|
70,135 |
|
|
|
84,960 |
|
|
Accrued liabilities |
|
167,788 |
|
|
|
302,178 |
|
|
Total current liabilities |
|
426,909 |
|
|
|
559,620 |
|
|
Long-term liabilities: |
|
|
|
|||||
Long-term debt, net of current maturities |
|
1,718,813 |
|
|
|
1,724,933 |
|
|
Long-term operating lease liabilities, net of current portion |
|
1,277,947 |
|
|
|
1,265,514 |
|
|
Deferred tax liabilities |
|
27,878 |
|
|
|
26,229 |
|
|
Other long-term liabilities |
|
143,872 |
|
|
|
143,123 |
|
|
Total long-term liabilities |
|
3,168,510 |
|
|
|
3,159,799 |
|
|
Stockholders’ deficit: |
|
|
|
|||||
Preferred stock |
|
— |
|
|
|
— |
|
|
Common stock |
|
827 |
|
|
|
826 |
|
|
Capital in excess of par value |
|
524,970 |
|
|
|
520,076 |
|
|
Retained earnings |
|
1,967,555 |
|
|
|
1,937,598 |
|
|
Accumulated other comprehensive loss |
|
(51,306 |
) |
|
|
(51,790 |
) |
|
Treasury stock, at cost, 63,218,724 and 62,910,964 shares, respectively |
|
(3,150,203 |
) |
|
|
(3,125,037 |
) |
|
Total stockholders’ deficit |
|
(708,157 |
) |
|
|
(718,327 |
) |
|
|
$ |
2,887,262 |
|
|
$ |
3,001,092 |
|
|
JACK IN THE BOX INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (In thousands) (Unaudited) |
||||||||
|
Sixteen Weeks Ended |
|||||||
|
January 21, 2024 |
|
January 22, 2023 |
|||||
Cash flows from operating activities: |
|
|
|
|||||
Net earnings |
$ |
38,683 |
|
|
$ |
53,254 |
|
|
Adjustments to reconcile net earnings to net cash provided by operating activities: |
|
|
|
|||||
Depreciation and amortization |
|
18,473 |
|
|
|
19,402 |
|
|
Amortization of franchise tenant improvement allowances and incentives |
|
1,418 |
|
|
|
1,215 |
|
|
Deferred finance cost amortization |
|
1,493 |
|
|
|
1,616 |
|
|
Excess tax (benefits) deficiency from share-based compensation arrangements |
|
(9 |
) |
|
|
143 |
|
|
Deferred income taxes |
|
(719 |
) |
|
|
3,385 |
|
|
Share-based compensation expense |
|
4,820 |
|
|
|
3,534 |
|
|
Pension and post-retirement expense |
|
2,106 |
|
|
|
2,144 |
|
|
Gains on cash surrender value of company-owned life insurance |
|
(6,161 |
) |
|
|
(6,631 |
) |
|
Losses (gains) on the sale of company-operated restaurants |
|
254 |
|
|
|
(3,825 |
) |
|
Gains on acquisition of restaurants |
|
(2,357 |
) |
|
|
— |
|
|
Losses (gains) on the disposition of property and equipment, net |
|
1,011 |
|
|
|
(10,009 |
) |
|
Impairment charges and other |
|
28 |
|
|
|
483 |
|
|
Changes in assets and liabilities, excluding acquisitions: |
|
|
|
|||||
Accounts and other receivables |
|
40,139 |
|
|
|
37,813 |
|
|
Inventories |
|
(484 |
) |
|
|
194 |
|
|
Prepaid expenses and other current assets |
|
9,587 |
|
|
|
6,953 |
|
|
Operating lease right-of-use assets and lease liabilities |
|
12,208 |
|
|
|
11,281 |
|
|
Accounts payable |
|
(13,826 |
) |
|
|
(31,285 |
) |
|
Accrued liabilities |
|
(125,861 |
) |
|
|
(24,677 |
) |
|
Pension and post-retirement contributions |
|
(1,698 |
) |
|
|
(1,688 |
) |
|
Franchise tenant improvement allowance and incentive disbursements |
|
(523 |
) |
|
|
(527 |
) |
|
Other |
|
(1,257 |
) |
|
|
(303 |
) |
|
Cash flows (used in) provided by operating activities |
|
(22,675 |
) |
|
|
62,472 |
|
|
Cash flows from investing activities: |
|
|
|
|||||
Purchases of property and equipment |
|
(38,829 |
) |
|
|
(24,028 |
) |
|
Proceeds from the sale of property and equipment |
|
516 |
|
|
|
22,103 |
|
|
Proceeds from the sale of company-operated restaurants |
|
1,739 |
|
|
|
17,609 |
|
|
Cash flows (used in) provided by investing activities |
|
(36,574 |
) |
|
|
15,684 |
|
|
Cash flows from financing activities: |
|
|
|
|||||
Principal repayments on debt |
|
(7,481 |
) |
|
|
(7,557 |
) |
|
Dividends paid on common stock |
|
(8,652 |
) |
|
|
(9,154 |
) |
|
Proceeds from issuance of common stock |
|
1 |
|
|
|
— |
|
|
Repurchases of common stock |
|
(25,000 |
) |
|
|
(14,999 |
) |
|
Payroll tax payments for equity award issuances |
|
(2,992 |
) |
|
|
(868 |
) |
|
Cash flows used in financing activities |
|
(44,124 |
) |
|
|
(32,578 |
) |
|
Net (decrease) increase in cash and restricted cash |
|
(103,373 |
) |
|
|
45,578 |
|
|
Cash and restricted cash at beginning of period |
|
185,907 |
|
|
|
136,040 |
|
|
Cash and restricted cash at end of period |
$ |
82,534 |
|
|
$ |
181,618 |
||
JACK IN THE BOX INC. AND SUBSIDIARIES SUPPLEMENTAL INFORMATION |
||||||
The following table presents certain income and expense items included in our condensed consolidated statements of earnings as a percentage of total revenues, unless otherwise indicated. Percentages may not add due to rounding. |
||||||
CONDENSED CONSOLIDATED STATEMENTS OF EARNINGS DATA (Unaudited) |
||||||
|
16 Weeks Ended |
|||||
|
January 21, 2024 |
|
January 22, 2023 |
|||
Revenues: |
|
|
|
|||
Company restaurant sales |
46.0 |
% |
|
51.3 |
% |
|
Franchise rental revenues |
23.2 |
% |
|
20.6 |
% |
|
Franchise royalties and other |
15.0 |
% |
|
14.5 |
% |
|
Franchise contributions for advertising and other services |
15.8 |
% |
|
13.6 |
% |
|
|
100.0 |
% |
|
100.0 |
% |
|
Operating costs and expenses, net: |
|
|
|
|||
Food and packaging (1) |
28.6 |
% |
|
30.3 |
% |
|
Payroll and employee benefits (1) |
32.6 |
% |
|
32.8 |
% |
|
Occupancy and other (1) |
18.8 |
% |
|
19.0 |
% |
|
Franchise occupancy expenses (excluding depreciation and amortization) (2) |
64.2 |
% |
|
61.8 |
% |
|
Franchise support and other costs (3) |
7.1 |
% |
|
2.5 |
% |
|
Franchise advertising and other services expenses (4) |
104.3 |
% |
|
104.0 |
% |
|
Selling, general and administrative expenses |
9.5 |
% |
|
9.5 |
% |
|
Depreciation and amortization |
3.8 |
% |
|
3.7 |
% |
|
Pre-opening costs |
0.1 |
% |
|
0.1 |
% |
|
Other operating expenses (income), net |
1.1 |
% |
|
(1.0 |
)% |
|
Losses (gains) on the sale of company-operated restaurants |
0.1 |
% |
|
(0.7 |
)% |
|
Earnings from operations |
16.3 |
% |
|
19.1 |
% |
|
Income tax rate (5) |
26.9 |
% |
|
26.7 |
% |
|
____________________________ |
||
(1) |
As a percentage of company restaurant sales. |
|
(2) |
As a percentage of franchise rental revenues. |
|
(3) |
As a percentage of franchise royalties and other. |
|
(4) |
As a percentage of franchise contributions for advertising and other services. |
|
(5) |
As a percentage of earnings from operations and before income taxes. |
|
Jack in the Box systemwide sales (in thousands): |
16 Weeks Ended |
|||||
|
January 21, 2024 |
|
January 22, 2023 |
|||
Company-operated restaurant sales |
$ |
132,057 |
|
$ |
126,142 |
|
Franchised restaurant sales (1) |
|
1,226,750 |
|
|
1,208,983 |
|
Systemwide sales (1) |
$ |
1,358,807 |
|
$ |
1,335,125 |
|
____________________________ |
||
(1) |
Franchised restaurant sales represent sales at franchised restaurants and are revenues of our franchisees. Systemwide sales include company and franchised restaurant sales. We do not record franchised sales as revenues; however, our royalty revenues, marketing fees and percentage rent revenues are calculated based on a percentage of franchised sales. We believe franchised and systemwide restaurant sales information is useful to investors as they have a direct effect on the company's profitability. |
|
Del Taco systemwide sales (in thousands): |
16 Weeks Ended |
|||||
|
January 21, 2024 |
|
January 22, 2023 |
|||
Company-operated restaurant sales |
$ |
91,983 |
|
$ |
144,049 |
|
Franchised restaurant sales (1) |
|
198,476 |
|
|
146,098 |
|
Systemwide sales (1) |
$ |
290,459 |
|
$ |
290,147 |
|
____________________________ |
||
(1) |
Franchised restaurant sales represent sales at franchised restaurants and are revenues of our franchisees. Systemwide sales include company and franchised restaurant sales. We do not record franchised sales as revenues; however, our royalty revenues, marketing fees and percentage rent revenues are calculated based on a percentage of franchised sales. We believe franchised and systemwide restaurant sales information is useful to investors as they have a direct effect on the company's profitability. |
|
JACK IN THE BOX INC. AND SUBSIDIARIES
RECONCILIATION OF NON-GAAP MEASUREMENTS TO GAAP RESULTS
(Unaudited)
To supplement the condensed consolidated financial statements, which are presented in accordance with GAAP, the company uses the following non-GAAP measures: Adjusted Net Income, Operating Earnings Per Share, Adjusted EBITDA, Restaurant-Level Margin and Franchise-Level Margin. Management believes that these measurements, when viewed with the company's results of operations in accordance with GAAP and the accompanying reconciliations in the tables below, provide useful information about operating performance and period-over-period changes, and provide additional information that is useful for evaluating the operating performance of the company's core business without regard to potential distortions.
Operating Earnings Per Share
Operating Earnings Per Share represents diluted earnings per share on a GAAP basis excluding acquisition, integration and strategic initiatives, net COLI gains, pension and post-retirement benefit costs, losses (gains) on the sale of company-operated restaurants, losses (gains) on the sale of real estate to franchisees, gains on acquisition of restaurants and the tax-related impacts of the above adjustments.
Operating Earnings Per Share should be considered as a supplement to, not as a substitute for, analysis of results as reported under
Below is a reconciliation of Non-GAAP Adjusted Net Income to the most directly comparable GAAP measure of net income. Also below is a reconciliation of Non-GAAP Operating Earnings Per Share to the most directly comparable GAAP measure, diluted earnings per share:
|
|
16 Weeks Ended |
||||||
|
|
January 21, 2024 |
|
January 22, 2023 |
||||
Net income, as reported |
|
$ |
38,683 |
|
|
$ |
53,254 |
|
Acquisition, integration, and strategic initiatives (1) |
|
|
5,621 |
|
|
|
1,651 |
|
Net COLI gains (2) |
|
|
(4,834 |
) |
|
|
(5,724 |
) |
Pension and post-retirement benefit costs (3) |
|
|
2,106 |
|
|
|
2,144 |
|
Losses (gains) on the sale of company-operated restaurants |
|
|
254 |
|
|
|
(3,825 |
) |
Losses (gains) on the sale of real estate to franchisees |
|
|
1 |
|
|
|
(9,467 |
) |
Gains on acquisition of restaurants (4) |
|
|
(2,357 |
) |
|
|
— |
|
Excess tax (benefits) shortfall from share-based compensation arrangements |
|
|
(10 |
) |
|
|
143 |
|
Tax impact of adjustments (5) |
|
|
(371 |
) |
|
|
4,002 |
|
Non-GAAP Adjusted Net Income |
|
$ |
39,093 |
|
|
$ |
42,178 |
|
|
|
|
|
|
||||
Weighted-average shares outstanding - diluted |
|
|
20,051 |
|
|
|
21,000 |
|
|
|
|
|
|
||||
Diluted earnings per share – GAAP |
|
$ |
1.93 |
|
|
$ |
2.54 |
|
Acquisition, integration, and strategic initiatives (1) |
|
|
0.28 |
|
|
|
0.08 |
|
Net COLI gains (2) |
|
|
(0.24 |
) |
|
|
(0.27 |
) |
Pension and post-retirement benefit costs (3) |
|
|
0.11 |
|
|
|
0.10 |
|
Losses (gains) on the sale of company-operated restaurants |
|
|
0.01 |
|
|
|
(0.18 |
) |
Losses (gains) on the sale of real estate to franchisees |
|
|
0.00 |
|
|
|
(0.45 |
) |
Gains on acquisition of restaurants (4) |
|
|
(0.12 |
) |
|
|
— |
|
Excess tax (benefits) shortfall from share-based compensation arrangements |
|
|
0.00 |
|
|
|
0.01 |
|
Tax impact of adjustments (5) |
|
|
(0.02 |
) |
|
|
0.19 |
|
Operating Earnings Per Share – non-GAAP (6) |
|
$ |
1.95 |
|
|
$ |
2.01 |
|
____________________________ |
||
(1) |
Acquisition, integration and strategic initiatives reflect charges that are not part of our ongoing operations, including consulting fees for discrete project-based strategic initiatives that are not expected to recur in the foreseeable future. |
|
(2) |
Net COLI gains reflect market-based adjustments on the company-owned life insurance policies, net of changes in our non-qualified deferred compensation obligation supported by these policies. |
|
(3) |
Pension and post-retirement benefit costs relating to our two legacy defined benefit pension plans, as well as our two legacy post-retirement plans. |
|
(4) |
Relates to the gains on acquisition of 9 Del Taco restaurants. |
|
(5) |
Tax impacts for the quarter calculated based on the non-GAAP Operating EPS tax rate of |
|
(6) |
Operating Earnings Per Share may not add due to rounding. |
|
Adjusted EBITDA
Adjusted EBITDA represents net earnings on a GAAP basis excluding income taxes, interest expense, net, losses (gains) on the sale of company-operated restaurants, other operating expenses (income), net, depreciation and amortization, amortization of cloud computing costs, amortization of favorable and unfavorable leases and subleases, net, amortization of franchise tenant improvement allowances and incentives, net COLI gains, and pension and post-retirement benefit costs.
Adjusted EBITDA should be considered as a supplement to, not as a substitute for, analysis of results as reported under
Below is a reconciliation of non-GAAP Adjusted EBITDA to the most directly comparable GAAP measure, net earnings (in thousands):
|
16 Weeks Ended |
|||||||
|
January 21, 2024 |
|
January 22, 2023 |
|||||
Net earnings - GAAP |
$ |
38,683 |
|
|
$ |
53,254 |
|
|
Income taxes |
|
14,205 |
|
|
|
19,385 |
|
|
Interest expense, net |
|
24,486 |
|
|
|
26,148 |
|
|
Losses (gains) on the sale of company-operated restaurants |
|
254 |
|
|
|
(3,825 |
) |
|
Other operating expenses (income), net (1) |
|
5,170 |
|
|
|
(5,501 |
) |
|
Depreciation and amortization |
|
18,473 |
|
|
|
19,402 |
|
|
Amortization of cloud-computing costs (2) |
|
1,606 |
|
|
|
1,562 |
|
|
Amortization of favorable and unfavorable leases and subleases, net |
|
124 |
|
|
|
533 |
|
|
Amortization of franchise tenant improvement allowances and other |
|
1,511 |
|
|
|
1,216 |
|
|
Net COLI gains (3) |
$ |
(4,834 |
) |
|
|
(5,724 |
) |
|
Pension and post-retirement benefit costs (4) |
$ |
2,106 |
|
|
|
2,144 |
|
|
Adjusted EBITDA – non-GAAP |
$ |
101,784 |
|
|
$ |
108,594 |
|
|
____________________________ |
||
(1) |
Other operating expense (income), net includes: acquisition, integration and strategic initiatives; costs of closed restaurants; operating restaurant impairment charges; accelerated depreciation and gains/losses on disposition of property and equipment, net. |
|
(2) |
Amortization of cloud computing costs includes the amounts for the non-cash amortization of capitalized implementation costs related to cloud-based software arrangements that are included within selling, general and administrative expenses. |
|
(3) |
Net COLI gains reflect market-based adjustments on the company-owned life insurance policies, net of changes in our non-qualified deferred compensation obligation supported by these policies. |
|
(4) |
Pension and post-retirement benefit costs relating to our two legacy defined benefit pension plans, as well as the two legacy post-retirement plans. |
|
Restaurant-Level Margin
Restaurant-Level Margin is defined as company restaurant sales less restaurant operating costs (food and packaging, labor, and occupancy costs) and is neither required by, nor presented in accordance with GAAP. Restaurant-Level Margin excludes revenues and expenses of our franchise operations and certain costs, such as selling, general, and administrative expenses, depreciation and amortization, other operating expenses (income), net, losses (gains) on the sale of company-operated restaurants, and other costs that are considered normal operating costs. As such, Restaurant-Level Margin is not indicative of the overall results of the company and does not accrue directly to the benefit of shareholders because of the exclusion of corporate-level expenses. Restaurant-Level Margin should be considered as a supplement to, not as a substitute for, analysis of results as reported under GAAP or other similarly titled measures of other companies. The company is presenting Restaurant-Level Margin because it believes that it provides a meaningful supplement to net earnings of the company's core business operating results, as well as a comparison to those of other similar companies. Management utilizes Restaurant-Level Margin as a key performance indicator to evaluate the profitability of company-operated restaurants.
Below is a reconciliation of non-GAAP Restaurant-Level Margin to the most directly comparable GAAP measure, earnings from operations (in thousands):
|
|
Jack in the Box |
|
Del Taco |
||||||||||||
|
|
January 21, 2024 |
|
January 22, 2023 |
|
January 21, 2024 |
|
January 22, 2023 |
||||||||
Earnings from operations - GAAP |
|
$ |
78,685 |
|
|
$ |
93,775 |
|
|
$ |
795 |
|
|
$ |
7,156 |
|
Franchise rental revenues |
|
|
(105,578 |
) |
|
|
(106,095 |
) |
|
|
(7,618 |
) |
|
|
(2,734 |
) |
Franchise royalties and other |
|
|
(63,343 |
) |
|
|
(69,366 |
) |
|
|
(9,987 |
) |
|
|
(7,024 |
) |
Franchise contributions for advertising and other services |
|
|
(67,362 |
) |
|
|
(65,313 |
) |
|
|
(9,569 |
) |
|
|
(6,373 |
) |
Franchise occupancy expenses |
|
|
65,188 |
|
|
|
64,555 |
|
|
|
7,436 |
|
|
|
2,669 |
|
Franchise support and other costs |
|
|
3,747 |
|
|
|
1,119 |
|
|
|
1,446 |
|
|
|
462 |
|
Franchise advertising and other services expenses |
|
|
69,893 |
|
|
|
68,254 |
|
|
|
10,341 |
|
|
|
6,612 |
|
Selling, general and administrative expenses |
|
|
33,895 |
|
|
|
32,380 |
|
|
|
12,469 |
|
|
|
17,762 |
|
Depreciation and amortization |
|
|
11,356 |
|
|
|
11,029 |
|
|
|
7,117 |
|
|
|
8,373 |
|
Pre-opening costs |
|
|
343 |
|
|
|
280 |
|
|
|
122 |
|
|
|
50 |
|
Other operating expenses (income), net |
|
|
5,279 |
|
|
|
(6,463 |
) |
|
|
(109 |
) |
|
|
962 |
|
Losses (gains) on the sale of company-operated restaurants |
|
|
(1,655 |
) |
|
|
845 |
|
|
|
1,909 |
|
|
|
(4,670 |
) |
Restaurant-Level Margin- Non-GAAP |
|
$ |
30,448 |
|
|
$ |
25,000 |
|
|
$ |
14,352 |
|
|
$ |
23,245 |
|
|
|
|
|
|
|
|
|
|
||||||||
Company restaurant sales |
|
$ |
132,057 |
|
|
$ |
126,142 |
|
|
$ |
91,983 |
|
|
$ |
144,049 |
|
|
|
|
|
|
|
|
|
|
||||||||
Restaurant-Level Margin % - Non-GAAP |
|
|
23.1 |
% |
|
|
19.8 |
% |
|
|
15.6 |
% |
|
16.1 |
% |
|
Franchise-Level Margin
Franchise-Level Margin is defined as franchise revenues less franchise operating costs (occupancy expenses, advertising contributions, and franchise support and other costs) and is neither required by, nor presented in accordance with GAAP. Franchise-Level Margin excludes revenue and expenses of our company-operated restaurants and certain costs, such as selling, general, and administrative expenses, depreciation and amortization, other operating expenses (income), net, and other costs that are considered normal operating costs. As such, Franchise-Level Margin is not indicative of the overall results of the company and does not accrue directly to the benefit of shareholders because of the exclusion of corporate-level expenses. Franchise-Level Margin should be considered as a supplement to, not as a substitute for, analysis of results as reported under GAAP or other similarly titled measures of other companies. The company is presenting Franchise-Level Margin because it believes that it provides a meaningful supplement to net earnings of the company's core business operating results, as well as a comparison to those of other similar companies. Management utilizes Franchise-Level Margin as a key performance indicator to evaluate the profitability of our franchise operations.
Below is a reconciliation of non-GAAP Franchise-Level Margin to the most directly comparable GAAP measure, earnings from operations (in thousands):
|
|
Jack in the Box |
|
Del Taco |
||||||||||||
|
|
January 21, 2024 |
|
January 22, 2023 |
|
January 21, 2024 |
|
January 22, 2023 |
||||||||
Earnings from operations - GAAP |
|
$ |
78,685 |
|
|
$ |
93,775 |
|
|
$ |
795 |
|
|
$ |
7,156 |
|
Company restaurant sales |
|
|
(132,057 |
) |
|
|
(126,142 |
) |
|
|
(91,983 |
) |
|
|
(144,049 |
) |
Food and packaging |
|
|
39,261 |
|
|
|
41,326 |
|
|
|
24,872 |
|
|
|
40,607 |
|
Payroll and employee benefits |
|
|
40,689 |
|
|
|
39,438 |
|
|
|
32,365 |
|
|
|
49,203 |
|
Occupancy and other |
|
|
21,659 |
|
|
|
20,377 |
|
|
|
20,394 |
|
|
|
30,993 |
|
Selling, general and administrative expenses |
|
|
33,895 |
|
|
|
32,380 |
|
|
|
12,469 |
|
|
|
17,762 |
|
Depreciation and amortization |
|
|
11,356 |
|
|
|
11,029 |
|
|
|
7,117 |
|
|
|
8,373 |
|
Pre-opening costs |
|
|
343 |
|
|
|
280 |
|
|
|
122 |
|
|
|
50 |
|
Other operating expenses (income), net |
|
|
5,279 |
|
|
|
(6,463 |
) |
|
|
(109 |
) |
|
|
962 |
|
Losses (gains) on the sale of company-operated restaurants |
|
|
(1,655 |
) |
|
|
845 |
|
|
|
1,909 |
|
|
|
(4,670 |
) |
Franchise-Level Margin - Non-GAAP |
|
$ |
97,455 |
|
|
$ |
106,845 |
|
|
$ |
7,951 |
|
|
$ |
6,387 |
|
|
|
|
|
|
|
|
|
|
||||||||
Franchise rental revenues |
|
$ |
105,578 |
|
|
$ |
106,095 |
|
|
$ |
7,618 |
|
|
$ |
2,734 |
|
Franchise royalties and other |
|
|
63,343 |
|
|
|
69,366 |
|
|
|
9,987 |
|
|
|
7,024 |
|
Franchise contributions for advertising and other services |
|
|
67,362 |
|
|
|
65,313 |
|
|
|
9,569 |
|
|
|
6,373 |
|
Total franchise revenues |
|
$ |
236,283 |
|
|
$ |
240,774 |
|
|
$ |
27,174 |
|
|
$ |
16,131 |
|
|
|
|
|
|
|
|
|
|
||||||||
Franchise-Level Margin % - Non-GAAP |
|
|
41.2 |
% |
|
|
44.4 |
% |
|
|
29.3 |
% |
|
|
39.6 |
% |
View source version on businesswire.com: https://www.businesswire.com/news/home/20240221077971/en/
Chris Brandon
Vice President, Investor Relations
chris.brandon@jackinthebox.com
619.902.0269
Source: Jack in the Box Inc.
FAQ
What was the same-store sales growth for Jack in the Box in the first quarter?
What was the systemwide sales growth for Del Taco in the first quarter?
How many new franchise development agreements did Jack in the Box sign?
What was the restaurant level margin for Jack in the Box?
What was the diluted EPS for the first quarter?
What was the franchise-level margin for Del Taco?
How many net restaurant counts did Jack in the Box increase in the first quarter?
What was the total revenues for the first quarter?
What was the net earnings for the first quarter?
What was the cash dividend declared by the Board of Directors?
